Durham drug developer BioCryst Pharmaceuticals suffered a second setback in as many weeks and said late Wednesday it is suspending development of an influenza treatment that had been supported with $235 million in federal research funding.
The company, with 42 employees in Durham and 31 in Alabama, said in a conference call with analysts Thursday morning that it is planning to restructure and cut costs as its major source of funding dries up. BioCryst had spent about two-thirds of the federal research grants that had kept the company afloat.
The company has lost much of its value in recent weeks as its stock nose-dived from a high of $4.69 a share last month to $1.38 as of mid-morning Thursday.
The suspension of peramivir, which was deemed ineffective for influenza by an independent panel of experts, is BioCryst's second drug cancellation. A week ago the company said it was suspending work on a Hepatitis C drug in response to concerns about the drug's toxicity.
"The reality is that everyone looked at the company as a peramivir company," said analyst Stephen Brozak of WBB Securities. "That has to be described as a body blow to the franchise."
Analyst Ed Arce of MLV & Co. said that BioCryst is in "duress" but not doomed. He noted that BioCryst has $44 million in cash but its pipeline of projects has been diminished and delayed.
The recent developments dramatically reduce BioCryst's portfolio of drugs under development. They also throw into doubt a pending merger, announced three weeks ago, with West Coast drug company Presidio.
BioCryst, created 22 years ago, has never produced a drug that is sold on the U.S. market. Peramivir is approved in Japan and South Korea.
In Thursday's conference call BioCryst officials said they will continue to look for a partner to take BioCryst's exerimental gout treatment into human testing. Company officials also announced a new drug, numbered 4430, for which they will seek federal research funding.
"In the scheme of the overall portfolio, there are a number of attractive assets we can pursue," said BioCryst investor relations director Robert Bennett.
"We've been working on a set of backups for a while," CEO Jon Stonehouse told analysts.